The business and culture of our digital lives, from the L.A. Times

Kaleidescape forges ahead with Blu-ray copying, but with limits

May 11, 2010 | 3:00
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Having defended itself against one costly attack by the Hollywood establishment, Kaleidescape seems ready to pick another fight. The first lawsuit pitted an entertainment industry trade group against Kaleidescape's home video jukebox system, which copies conventional DVDs onto hard drives. On Tuesday morning, Kaleidescape announced an upgrade that can copy high-definition Blu-ray discs as well. The move seems like a, well, aggressive reading of the license agreement that manufacturers of Blu-ray players must sign. But the company is also making a concession to Hollywood that seems to defeat the purpose of its products.

Based in Sunnyvale, Kaleidescape makes home media servers for people who have so much disposable income, they're willing to spend as much on a movie storage system as they might on a Mini Cooper. Its original product, which cost about $27,000, did for DVD collectors what iTunes did for CD owners: it liberated their movies from their plastic confines...

... enabling them to be watched and managed in a better way than the discs allowed. The benefits include being able to play movies without having to wade through the previews and multiple anti-piracy warnings, as well as being able to view them on any TV around the house (provided that the TVs are all connected to Kaleidescape players, which are not cheap).

The system boasted military-grade security, but it still drew a breach-of-contract lawsuit from a licensing body called the DVD Copy Control Assn. — a group representing the studios, consumer electronics companies and high-tech firms. According to the DVD CCA, the license governing DVD technology doesn't forbid copying, but it does bar movies from being played without the DVD being present in the player. Kaleidescape won in California Superior Court, but last August the DVD CCA prevailed on appeal, sending the case back to Superior Court for another round.

Tuesday, Kaleidescape announced that a new, $4,000 Blu-ray player/copier will start shipping on May 18th, enabling customers to add high-definition movies to their stored collections. Unlike the previous version, however, the new model won't allow Blu-ray movies to play from a Kaleidescape hard drive unless the disc is in the player. The point, company CEO Michael Malcolm said in an interview, is to address the studios' concerns about people copying movies that they rent or borrow, rather than just the ones they bought. "We're certainly hoping that they’re going to like this approach," he said. "We’re making it impossible to import the disc and then take the disc and play it separately while the imported copy is still playable."

It's a big change for Kaleidescape, and it sacrifices one of the basic features of the system: the ability to sit down on your couch, browse through your collection and pick whatever movie strikes your fancy. Instead, after deciding what to watch, users of the new player will have to flip through their collection to find the matching Blu-ray disc in order to play the copy they have. Malcolm insists that the system still provides plenty of other benefits, such as the ability to jump immediately to the start of a movie. Still, the new player seems more like an interim step, holding customers' interest until the company comes out with a carousel model next year that can hold multiple Blu-ray discs. (The company also announced a $2,500 model that just plays high-def movies without copying them.)

What's worse for Kaleidescape is that the group that holds the license to Blu-ray's anti-piracy technology, the Advanced Access Content System Licensing Administrator, doesn't acknowledge the legality of the company's compromise. When asked whether a licensee could rip Blu-ray discs, Michael Ayers, chairman of AACS LA, offered this statement:

The AACS technology and licenses do not permit ripping of Blu-ray discs unless the copy has been authorized by the content owner, either by setting the Copy Control Information appropriately (and nearly all BD movies are set for “Copy Never”, just like DVDs), or by individual authorization through the Managed Copy process, which we anticipate rolling out at the end of this year or the beginning of 2011.

Some studios provide Blu-ray buyers with a digital copy that they can download or rip onto a PC or Mac, but those aren't high-definition files. And Malcolm said his company wasn't willing to wait for whatever managed-copy system AACS eventually rolls out because the rules will be "substantially at the whim of the content owner." Instead, it went ahead with its own solution because, Malcolm contends, the AACS license doesn't prohibit copying. The only restriction it places, he said, is a ban on playing more than one copy of a movie at a time.

Kaleidescape hasn't sought to clear its new products with AACS because "there is absolutely nobody who can answer questions" for the group, Malcolm said. "We’d love to be able to have a dialog with the studios, but we have no idea how to make that happen. And also, none of them read the [AACS licensing] agreement."

The company's experience with the DVD CCA, however, suggests that the entertainment industry cares deeply about the letter of its licensing agreements, not necessarily the spirit. RealNetworks' experience with the MPAA provides an even better example. The company tried to sell a program that would let people copy DVDs onto their computers in a way that rendered the files more secure than they are on disc. But the studios successfully sued to block the RealDVD software and a related home media server rather than work with Real on a method to block "rent, rip and return" — something that consumers are doing anyway with free software from the Web.

So it may matter little to the studios that Kaleidescape has come up with its own way to address piracy, or that its products are an impractical alternative to the cheap Blu-ray ripping software already available online. No, the most important question may be whether Kaleidescape observes the AACS license to the letter. We'll have an answer soon enough.